This blog was designed to discusss problems around housing the homeless in Australia and to create innovative new housing options. Written from the viewpoint of a rooming house operator. It will be a no nonsence expose of what is really happening behind closed doors whilst we await the decisions of DHS Inquiry into Rooming Houses. Will also cover my views on tax, banking, economic policy issues in both Australia and USA.

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Tuesday, 29 April 2014

IT SEEMS THE RBA IS SETTING UP TO TRAP BUILDERS WHO TAKE ON TOO MANY PROJECTS BEFORE THE RATES ARE HIKED BY 100%. This method of destruction is not new and will trap many builders and developers who take on long term developments and do not get out before interest rates go up.

Speculation about interest rates will continue as always and is often used by banks and brokers to achieve their financial trading goals from time to time, well every day really. I wont go too technical so as not to confuse you more, but there is a lot of money made out of speculation, even when rates are stable.

Some rather big groups have been caught before & the Abbey Capital Property Group circa 1979 comes to mind when they & Mainline could not complete the almost finished 46 Level Tower at 500 Bourke Street office tower which they had to sell for a 50% Off bargain basement price to the NAB. Lots of smaller developers went broke then and again during 1989-90 and every few years every time the RBA want to slow down wages inflation caused by politicians silly policies.

It could be argued that voters deserve the egotistical politicians and their political parties they keep revoting in after they vote them out a few years earlier because of lies, incompetence, fraud & pride etc Problem is there is no choice but the main rabble of well meaning people who end up looking like con artists on both sides. Some developers will make money before the next GFC or RBA interest rate hike will see more new home owners lose their shirts, but I argue that there will be more losers than winners except for the jobs created during the speculation period. We have politicians trying to convince us the 2% unemployed over the usual 4% [full employment] want jobs when we all really know they just want a secure income. What the politicians don't seem to do is discuss their plans to create extra jobs with the RBA which will invariably hike interest rates 100% higher if that 2% were to suddenly find new jobs and in so doing cause a potential wages pressure on general wages which with the help of unions would become reality. So my question to the brains trust at Treasury is: would it not be cheaper to pay the 4 + 2% unemployed a 'stay at home option payment fee' to keep interest rates low at current rates rather than risk increasing interest rates by 100% causing grief for the other 94% of people in jobs and with mortgage loans? Why do we need to help increase revenue for the depositors as the banks will still earn their margins surely?Sure ive left out a lot of other varioable in setting official interest rates but I still feel id like see some economic debate about my proposal.